- Mexican peso among top performers, trims US tariffs losses.
- Improvement in risk sentiment weighs on US Dollar against EM currencies.
The USD/MXN extended the correction during the American session and printed a fresh 2-day low at 19.52. The pair is sharply lower compared to yesterday’s multi-month high it reached at 19.88.
An improvement in risk sentiment among emerging market currencies amid expectation that the Federal Reserve will refrain from raising rates and could even lower them favored the Mexican peso. The currency also benefited from less pessimism from the trade tensions between the US and Mexico.
Will US President Trump continues to reclaim action, Mexican leaders mentioned today they are optimistic about reaching a deal before the June 10 deadline and they will present an immigration plan on Thursday. Also, some Republicans showed some opposition to the tariffs on all Mexican imports.
Volatility around the MXN is expected to remain elevated over the next days, as negotiations take place in Washington. From a technical perspective, the bullish momentum eased significantly over the last hours but the greenback still shows some strength. A decline below 19.40 would be a positive development for the Mexican peso that could lead to a slide to 19.30, the next strong support. On the upside, now 19.75 emerges as the immediate resistance. A daily close on top of 19.80 would point for a test of the critical barrier at 19.95/20.
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